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In Lieu of Bailout, a New Strategy
Keywords:
Tags: Capital Markets,
The business model where hedge funds take in short term money from investors for a 2% fee and a fifth of profits, and invest it in longer term bets and sometimes illiquid situations, is breaking down. This happened to the investment banks and ended with the collapse of Lehman and Bear Stearns. With losses approaching 20%, many illiquid investments, and investors asking for their money, this model may lead to a rapid shrinking of the hedge fund industry, which now has about $2 trillion of investor money.
$52 billion of government money to go through AIG to banks and in turn to hedge funds for betting against the housing market.
01/19/2009
The Financial Products Group's 370 person staff at AIG earns bonueses of $400 million for AIG insurance sold at "fractions of a penny for every dollar covered, less than $10 million for $1 billion of insurance" (WSJ). It costs the government $52 billion to take care of this and $165 million in bonus check go out for retention incentives with binding contracts to these staffthe same week. Thats the kind of financial innovation that has exacerbated the turmoil and created acrisis of condfidence for financial markets in the USA by March 2009.
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Hedge Funds that hope to make money off the "piigs" countries.
01/19/2009
These "piigs" countries are Portugal, Italy, Greece, Ireland and Spain that have huge debt for which default protection costs are rising amid the debt crisis in Dubai. See the link to Ireland and the austerity budget just announced and 12.5% unemployment.
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Kenneth Griffin and his Citadel hedge fund.
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Citadel lost $8 billion of its investors (pension funds, endowments and the superrich) in 2008. In 2009 he is trying to get investors back to his fund but is meeting resistance from those who remember the losses in 2008.
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Summers worked for D.E. Shaw, a large fund, in 2008. He was managing director and was paid $5.1 million for one day aweek at that fund.
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Summers Withdraws Name for Fed Chairmanship
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Moffatt of IBM, Goel of Intel, and Kumar of McKinsey are in the top management ranks of these companies.
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Hedge Funds
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Risky bank lending to private equity and hedge funds and higher leverage in the U.S. -2009-2010.
01/19/2009
The return to risky investments and lending of financial institutions in the USA, as the 2008-2009 financial crisis recedes after heavy government intervention.
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Hedge Funders Are All a Little Nuts
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Banks' Loans To Funds Are Back at Levels Before Crisis
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U.S. Hedge Fund manager John Paulson
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Hedge Funders Are All a Little Nuts
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Hedge Funds' Investing Prowess Doesn't Live Up to Billing
Wall Street Journal 05/27/2014
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Trader Racks Up a Second Epic Gain
Wall Street Journal 01/28/2011
John A. Paulson Makes $5 Billion Betting on Gold
New York Times 01/28/2011
Paulson Funds Hit Hard by Recent Gold Selloff
Wall Street Journal 10/10/2011
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